REPORT DIGEST

MEDICAL DISTRICT COMMISSION

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For The Year Ended June 30, 2009

STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN NET ASSETS

FY 2009

FY 2008

OPERATING REVENUES

Grants ......................................................................................................

Rental and Service Income...................................................................

Other Operating Revenues..................................................................

Total Operating Revenues............................................................

OPERATING EXPENSES

Property Management and Development........................................

Grant Programs.....................................................................................

Depreciation and Amortization..........................................................

Total Operating Expenses.............................................................

OPERATING (L0SS) INCOME...........................................................

NONOPERATING, REVENUES (EXPENSES)

State Appropriations...........................................................................

Interest Income.....................................................................................

Interest Expense...................................................................................

Total Nonoperating Revenues (Expenses)................................

Capital Transfers (Net gain/loss)

CHANGES IN NET ASSETS

$ 741,589

3,955,762

90,410

$ 4,787,761

$ 4,759,253

512,911

$ 1,045,177

$ 6,317,341

$(1,529,580)

$ ------

1,525,091

$(3,229,586)

$(1,704,495)

$ 102,306

$ (3,131,769)

$3,519,851

3,143,975

91,348

$ 6,755,174

$ 5,461,990

3,346,280

1,351,979

$10,160,249

$(3,405,075)

$ 37,032

1,635,159

(2,794,007)

$(1,121,816)

$ 28,879

$ (4,498,012)

STATEMENT OF NET ASSETS

FY 2009

FY 2008

ASSETS

Cash and Cash Equivalents...............................................................

Accounts and Other Receivables......................................................

Notes Receivable.................................................................................

Investments..........................................................................................

Debt Issuance Costs...........................................................................

Capital Assets, Other Assets (net)...................................................

Total Assets...................................................................................

LIABILITIES

Accounts Payable and Accrued Expenses......................................

Interest Payable....................................................................................

Line of Credit........................................................................................

Certificates of Participation................................................................

Due to other State Agencies..............................................................

Other......................................................................................................

Total Liabilities...............................................................................

NET ASSETS

Invested in Capital Assets (net)........................................................

Restricted for Grants and Capital Projects.......................................

Unrestricted..........................................................................................

Total Net Assets..........................................................................

TOTAL LIABILITIES AND NET ASSETS

$ 2,256,529

429,314

33,915,099

2,310,944

706,084

56,917,723

$96,535,693

$ 1,297,521

802,820

2,993,921

27,315,000

26,093,784

448,541

$58,951,587

$ 27,678,461

323,284

9,582,361

37,584,106

$96,535,693

$ 1,402,666

486,086

34,935,115

3,034,801

738,798

57,083,180

$97,680,646

$ 1,588,607

787,926

2,592,506

27,970,000

23,529,761

495,971

$56,964,771

$ 28,266,807

2,373,757

10,075,311

$40,715,875

$97,680,646

EXECUTIVE DIRECTOR

During Audit Period: Samuel Pruett

Currently: Samuel Pruett

Unexpended proceeds of $8,152,049 were not remitted to the State Treasury

As of June 30, 2006 the unexpended portion of these proceeds totaled $7,877,969 and the Commission had not yet remitted any excess funds to the State Treasury

As of June 30, 2007 $4,000,000 was pledged as collateral for a bond offering and $4,000,000 as collateral for a bank line of credit - no changes were noted in fiscal years 2008 and 2009

Commission officials disagree

Attorney General also disagrees with Commission measures

Auditor Comment

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FAILURE TO REMIT UNEXPENDED PROCEEDS FROM THE SALE OF COMMISSION PROPERTY INTO THE INCOME FUND HELD IN THE STATE TREASURY

The Illinois Medical District Commission did not remit unexpended proceeds from the sale of Commission property to the State Treasury for deposit into the Medical Center Commission Income Fund.

The Illinois Medical District Act requires the Commission to remit to the State Treasury all moneys on hand (originating from the sale of Commission property) as of June 30 in excess of $350,000.

During Fiscal Year 2004, the Commission sold real property to the Federal Bureau of Investigation. The proceeds from the sale totaled $10,688,767. As of June 30, 2005, an estimated $8,152,049 of those proceeds has not been expended or obligated and the Commission did not remit these excess funds to the State Treasury. As of June 30, 2006, the unexpended portion of these proceeds totaled $7,877,969, and the Commission had not yet remitted any excess funds to the State Treasury. As of June 30, 2007, funds in the amount of $4,000,000 were pledged as collateral for a $40 million bond offering and pursuant to a Commission Resolution dated May 23, 2006, the remainder of the funds were pledged as collateral for a $4,000,000 line of credit with a bank. There were no changes noted to the status of these funds in fiscal years 2008 and 2009. (Finding 2, pages 13-16) This finding was first reported in 2005.

We recommended the Commission remit the excess moneys to the State Treasury for deposit into the Income Fund.

The Commission’s response to this finding remains as stated in prior responses, that the Commission did not remit unexpended proceeds from the sale of Commission property to the State Treasury because the proceeds have been expended. As the Commission has noted in prior responses, $4,025,000 of the amounts that the Auditor General maintains must be deposited were expended upon the cash equity portion of bonds issued by the Illinois Finance Authority and the remainder was expended as collateral for a line of credit that was used in the acquisition of parcels of land by eminent domain.

The Commission acknowledges that both the Auditor General and Attorney General disagree with the measures taken by the Commission but states these disagreements do not change the facts that the measures taken were within the authority of the Commission. The Commission response acknowledges the Attorney General position that legislative action is required to resolve this matter, and the Commission states it is now diligently pursuing that course. (For previous Commission responses, see Digest Footnote #1)

In an Auditor Comment, we stated that the auditors continue to stand by the finding based on the same criteria that was cited in the prior four audits. We noted that under the statute, by October 10^th of each year money is either expended or it is on hand. Under common everyday usage, the term “expended” means paid out. This definition is also consistent with usage in State government. Under the plain meaning of the law, money on hand in excess of $350,000 must be remitted to the State Treasury in the time frame set forth in Section 10. The auditors do not believe the statute allows the Commission to hold for an indefinite period of time an unlimited accumulation of money that has been “set aside” or “pledged as collateral” or “committed” but not paid out.

On December 31, 2008 the Office of the Attorney General issued a Formal Opinion (No. 08-004). Not only, according to the Attorney General, were the monies at issue “on hand” and not properly remitted to the State Treasurer, but they were used by the Commission as security for an unauthorized line of credit. The auditors continue to believe these monies should be remitted to the State Treasury.

OTHER FINDING

Another finding dealt with noncompliance with required contracting procedures. We will review the Commission’s progress toward implementation of all our recommendations in our next audit.

AUDITORS' OPINION

Our auditors stated that the financial statements present fairly, in all material respects, the respective financial position of the business-type activities of the Commission, as of June 30, 2009, and the respective changes in net assets and cash flows, thereof for the year then ended.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KMC:drh

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this audit were

E. C. Ortiz & Co., LLP.